Revenue to get data on owners of EU property

Owners of overseas holiday homes who evade tax will have their names passed on to the Revenue Commissioners from next year under new rules forcing foreign banks to disclose the names and addresses of their Irish customers.

The European Union savings tax directive, which came into effect on July 1st, obliges financial bodies paying interest on deposit to give their local revenue authority details of all customers resident outside the country but within the EU. The local tax authority will then share the information with the Revenue Commissioners.

The banks are due to make their first report, covering the period from July 1st to the end of this year, by March 31st, 2006.

A spokesman for the Revenue said that it expected to receive the first reports from overseas tax authorities by June in accordance with the time limits under the directive.

Updated lists of Irish residents with overseas accounts will then be swapped between almost all EU member states - including popular holiday home destinations such as Spain and France - once a year.

The primary aim of the directive is to ensure that interest payments made in one EU member state to an individual resident in another are taxed in accordance with the rules of the latter country.

As the directive requires financial institutions to establish the identity and residence of all individuals to whom they make interest payments, the names of holiday home owners who open local bank accounts for rental income derived from their properties will show up on the reports.

As as result, the savings tax directive will help the Revenue identify much more than just evasion of Deposit Interest Retention Tax (Dirt) on savings.

"We hope the information will prove useful in more ways than one," a spokesman for the Revenue confirmed.

"The three issues we will be looking at in connection with holiday homes are what was the source of the money used to purchase the holiday home, the income tax implications if they rent it and the capital gains issue if they sell it," he said.

Revenue chairman Frank Daly signalled more than a year ago that owners of overseas holiday homes would be the target for future investigations into tax evasion as co-operation between European tax authorities increased.

A Revenue spokesman said it had been monitoring the situation and that it hoped the information provided under the savings tax directive would prove a useful lead to undeclared income. "It's another piece of the jigsaw."